Minister Noonan's announcement means insurance providers will have to raise their prices

Families will have to pay as much as €360 extra a year for their health insurance after a decision was made to change the tax treatment of premiums in the Budget.

Finance Minister Michael Noonan made the shock announcement which has forced insurers to raise their prices for customers.

The decision to limit the tax relief on health insurance policies could lead to price rises of between 4% and 20%.

Insurance experts have said that the change will affect 9 out of 10 plans.

The changes is expected to save €127 million.

This goes against claims made by Minister Noonan that the price hike would only impact “gold-plated” plans.

Before the Budget, people could get tax relief of 20% off the price of a health insurance policy.

Now there is a limit, the 20% tax relief only applies to the first €1,000 of an adult’s policy.

This would mean a health policy of €1500 would now cost €1,300 after costing €1,200 earlier in the week. Most policies will now have to their prices increased.

Almost 240,000 have stopped getting health insurance since the recession began in 2008.

Mr Noonan had said: "In relation to medical insurance relief, I have decided to cap the amount of premium on which tax relief will be available to €1,000 per adult and €500 per child.

"This will restrict the exposure of the Exchequer in relation to premiums paid for 'gold-plated' medical insurance policies, while not affecting the majority of individuals who avail of more standard levels of medical cover."

Of the Health Insurers VHI’s extra plan is expected to rise by €259 for an adult, Aviva's Level 2 Hospital would increase by €137 and Layla’s Essential Plus with Excess would rise by €166.